Correlation Between Bitcoin SV and MCO
Can any of the company-specific risk be diversified away by investing in both Bitcoin SV and MCO at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Bitcoin SV and MCO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bitcoin SV and MCO, you can compare the effects of market volatilities on Bitcoin SV and MCO and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Bitcoin SV with a short position of MCO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bitcoin SV and MCO.
Diversification Opportunities for Bitcoin SV and MCO
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bitcoin and MCO is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin SV and MCO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MCO and Bitcoin SV is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Bitcoin SV are associated (or correlated) with MCO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MCO has no effect on the direction of Bitcoin SV i.e., Bitcoin SV and MCO go up and down completely randomly.
Pair Corralation between Bitcoin SV and MCO
Assuming the 90 days trading horizon Bitcoin SV is expected to under-perform the MCO. But the crypto coin apears to be less risky and, when comparing its historical volatility, Bitcoin SV is 33.44 times less risky than MCO. The crypto coin trades about -0.12 of its potential returns per unit of risk. The MCO is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 85.00 in MCO on January 25, 2024 and sell it today you would earn a total of 1,240 from holding MCO or generate 1458.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Bitcoin SV vs. MCO
Performance |
| Timeline |
| Bitcoin SV |
| MCO |
Bitcoin SV and MCO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bitcoin SV and MCO
The main advantage of trading using opposite Bitcoin SV and MCO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bitcoin SV position performs unexpectedly, MCO can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in MCO will offset losses from the drop in MCO's long position.The idea behind Bitcoin SV and MCO pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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